Growth for Chinese food and drink sectors post scandal

By Mike Stones

- Last updated on GMT

Related tags Food safety Food

China’s food and beverage industries are poised for big growth in domestic and overseas markets, according to a new report from Research and Markets.

Its independent review, China Food and Drink Report Q4, charts the progress of vigorous industries determined to succeed in increasingly competitive markets in the wake of the contamination scandal that claimed up to six lives and injured up to 300,000 infants, according to the Chinese government’s own figures.

Acquisitions

The China Food and Drink Report​notes that Japanese and US firms have been particularly prominent in recent months:

US soft drinks behemoth The Coca-Cola Company in September 2008 made a takeover bid for the largest privately owned juice producer in China, Huiyuan Juice Group.

“Another development in the drinks sector was the US Heckmann Corporation‘s acquisition of Chinese bottled water producer China Water and Drinks Inc.”

It also points out that last September, the largest global meat processor, US-based Tyson Foods, signed an agreement with China's Shandong Xinchang Group, following the formation of a joint venture with Jiangsu Jianghai Poultry Industry Group.

In addition, US banana producer Chiquita Brands International, agreed a joint venture with vegetable exporter Haitong Food Group and Japanese Kikkoman Corporation and Yakult Honsha Co both announced plans to boost their production in China.

Spending power

The report, said BMI, forecasts a 126 per cent increase in food consumption values, measured in US dollars, over the next four years as Chinese consumer spending power rises.

Meanwhile, Chinese food and drink companies are targeting overseas markets, claims the report.

Examples include Shanghai Maling Food Co Ltd opening a new factory in the Czech Republic last May and beverage company Kweichow Moutai Co planned partnership with an international spirits producer.

Responsibility

Meanwhile food safety experts, at a meeting held in China in September, said that the country must build a climate of responsibility among its food producers to protect consumers around the world from unsafe products.

Weiming Jiang, president of DSM China, said that companies need to follow ‘basic business ethics’.

“Social responsibility is important. It’s a hearts and minds issue, not only a regulation issue,”​ explained Jiang, adding that companies in China need to learn about transparency.

He said that DSM has developed a system of reporting for its suppliers. “On top of reporting income, companies should also report their responsibility. We get our suppliers to sign a contract with us to report on how they monitor food safety.”

Robert Madelin, director general of the European Commission’s DG Sanco, also pointed to the weakness in China’s reporting system. “The law must be strengthened, as we learned in Europe, to put positive obligations on operators to check safety, a strong obligation to record…and a legal obligation that economic operators tell food safety officials. You check, record and tell.”

Call for regulatory agency

The UN issued a report in October calling for a unified regulatory agency to deal with food safety in China rather than the manifold government agencies that currently deal with the area.

The UN paper urges a more modern food safety law as well as the need for improved monitoring, inspection and enforcement; the need for education and training of employees in the food industry and enforcing agencies; and better standards to bring the country in line with international norms.

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